The following editorial is the sole view of the author and does not represent the opinions of the AVForums in whole or in part.
<h3>With CES now well and truly over, Phil Hinton gives his opinions on where things now stand in the HD war. And clearly blames the industry as a whole for this mess!</h3>
Where do you start with an article on the current format war?
With so much press attention in the last few weeks maybe the subject has been done to death? However I feel that there are still too many unanswered questions and points of interest to let the current trend of negative press comment rule the column inches. You see I have always been format neutral when it comes to HD DVD and Blu-ray and even though I have been privy to information many enthusiasts would find captivating, I have never felt the need to discuss the subject in any real depth here. I have ignored the format discussion threads where the subject seems to go around in circles and have been content to report matters of fact within our podcasts and articles, rather than be a promotions arm of the war, unlike many a lazy reporter out there.
It is quite clear that there has to be a winner in this debacle and one side will have to hold up the white flag sooner or later. That also seems to be the overwhelming opinion of the general forum member who is still sitting on the fence. But what about those who have already taken the plunge and bought into one format or the other (or even both)? Does their opinion matter to anyone who has a responsibility for the current mess we find ourselves in? Or is it the very industry we love so much that was responsible for this format war?
When we talk about the consumer electronics world, we are inevitably talking about business and finance. It is true that the industry has seen hard times as the prices of electronic products are eroded and the margins get tighter. This is usually great news for the consumer and even though there are cries from the manufacturers, they also tend to survive as the years go by. With research and development they also invent the next big thing and that usually means a period of time where the margins are healthy before the volume and erosion kick in. There are many examples of this in action - look at flat panels in the LCD camp, the price of DVD players and software and the continual erosion of other CE products after their initial ‘honeymoon' period. So is it any surprise that one side of the HD disc battle offers up significant margins for the CE manufacturers with this new technology and format? This is one area that seems to be ignored when you do venture into format war discussion threads. Why is it that one sides hardware costs so much more than the other? Are there really such huge technological differences that warrant such a consumer price disparity? If that is the case, why is the more expensive format not complete in terms of special features and internet access when it comes to profiles? Is it maybe because the margin is better for the manufacturer and dealer?
Ok, so what I have said above may be construed by some as a conspiracy theory or a pro HD DVD angle of attack on the other format, but what I want to know is why the ‘facts' in the market place don't add up when you are a consumer or enthusiast. Indeed I have kept my mouth firmly shut in the past when it comes to ‘war' threads and I like to remain as independent as possible, but at the same time I get just as narked as the rest of you when it comes to things so obvious and ugly right in front of our noses. Can anyone give an authoritive answer as to why Blu-ray stand alone players are so much more expensive compared to HD DVD? Some will say that Toshiba are subsidising their players and I would tend to agree that seems likely, but even so that alone cannot be the reason a BD player can cost up to twice the price of a Toshiba HD-XE1's RRP! For the sake of this argument I acknowledge that the Playstation 3 is a BD player within a games console and it is now around the £300 mark, it offers the best possible route into the format for many and is upgradeable to an extent through firmware. But even so, why are the standalones still more expensive when compared to similar machines from the other side? At CES this year it was also very obvious that every major CE company (bar Toshiba for obvious reasons) has a BD player or two coming in the next few months, many with starting points of $500.
If you then take into account that many of these machines are still not profile 1.1 compliant and certainly not capable of BD live anytime soon, what is actually going on here? Top dollar, half finished format yet backed by every major CE manufacturer against a finished format profile in HD DVD and cheap, reliable standalone players, am I the only one who smells something off?
And then you have the studio debacle, with one side or the other claiming to have the superior releases. One of those very studios just happens to be owned by a CE company. Content is what will sell your format, but as with the case with DVD in the past, once the player prices hit rock bottom, it's the studios that make the margins not the CE companies. So if you are a manufacturer with some new product to sell playing optical media containing films, do you want the studio to get the entire margin once the competition and volume forces player prices as low as $20? Do you want a repeat of DVD? If I were a CEO my answer to that question would be an emphatic No!
And there is evidence that this is exactly what is happening with this format war. The DVD forum is responsible for the specifications for the HD DVD format (and its predecessor DVD). Every major CE manufacturer is a member of the DVD forum and many of them (as well as the studios) where responsible for suggesting and approving the technical specifications of the HD DVD format. One studio even went as far as demanding the PIP and internet features be added as mandatory. So why after all that trouble did almost every major CE company then jump aboard the Blu-ray format? This was a format designed originally for the Japanese market as a high definition recording format for HDTV in that country, that was then modified once Sony realised that PVR would be the dominant product for that market. It then had a researched and developed format that was no longer financially viable. So low and behold we then get the origins of the BDA (Blu-ray Disc Assosiation) with an aim to make sure the mistakes of DVD where not repeated by the CE companies when it came to high definition and their margins. Again it sounds like conspiracy theory but its all ‘fact' and well known within the industry. Let's not forget this is all about one thing, making money and keeping those margins healthy. Any business man will appreciate the finer details and so take the same route.
Indeed, I would go as far as saying the BDA and its members have the right idea when it comes to a business model for a sustainable profit margin and learning from their mistakes in the past. However, what I don't accept is the mess we currently now have to deal with. Let's start with the hardware issues.
Toshiba surprised everyone when they suddenly came to market early with HD DVD, it was such a surprise that the BDA were caught with their pants down. What also surprised everyone was that the specifications' were complete from day one and available on the software and hardware. It is now well known that the BDA had no answer and were at least still a year or more from market with a finished product and software. So BD was rushed to market and the first discs and player were woefully behind the Toshiba machine. Over the months this changed with content matching that of HD DVD and the machines improved through firmware upgrades. But even two years on we still do not have the finished specifications for Blu-ray and despite claims that it was never intended to have all the same profile, rather it's a value added extra you can take or leave, in truth BD is still not complete.
That's not to say that HD DVD is better than BD technically when it comes to movie playback, rather that HD DVD had the specifications nailed down before coming to market, BD has played catch up every since.
So I may be trampling over old ground, but this is important for my next point, the early adopter and consumer. Again let's stick to facts in this subject area and the following can be confirmed with our chat with the BDA in the CES podcast on this site. If you have a pre-profile 1.1 player that has no firmware upgrade and you want the PIP features as well as the promised profile 2.0 BD live add on, you will have to buy another player! That's right, you have to go and buy another blu-ray player to get the same features that are freely available on HD DVD. So not only did that first generation player cost the early adopter the best part of twice the price of HD DVD, they will now have to go and spend exactly the same again just to catch up with something a £120 HD DVD player can do already. Again this is obviously good for the margins.
This is where I get really annoyed with the whole format war topic and why I avoid the fanboy sites and threads about this subject. It amazes me that so called film fans take sides so aggressively with this discussion point that people who should know better are playing right into the hands of the marketers. And on top of this we now have journalists and website administrators telling us what we should buy and that HD DVD should just give up and go away as we only want one format – as long as it's Blu-ray it seems!
I agree that if there had been one format from the start – be it Blu-ray or HD DVD, we would have had an easier choice in what to buy and the software that would be available. It might by now have attracted an audience and customer base that included Joe public and his new HDTV. But on the other hand maybe we have been lucky that Toshiba came to market when they did and provided some competition to the BDA and its expensive format. If HD DVD hadn't arrived when it did, do you honestly believe standalone BD players would be as cheap as they are, or nearer the premium release prices of 2 years ago?
So this brings us back to which format should remain and who will hold up the white flag. Certainly the announcement by Warner that they were going BD exclusive from May 2008 had the entire CE industry and everyone at CES wondering if that was it for HD DVD. Indeed most of the journalists present and within ear shot were getting as excited as schoolboys and suddenly speculating that Paramount and Universal would be next, some even went to print with the rubbish they were speculating. I had to calm myself down at some points with the rabid exclamation from any journo you met that this years CES had finally won the war for Blu-ray. But to me it was another insight into just how ugly and frenzied the AV Industry can be when it smells blood and a tidy margin can be made.
The days that followed the Toshiba press conference at CES saw some stunning headlines from the likes of the broad sheet press, where their content was just plainly speculation and utter tripe. They proclaimed HD DVD was dead and that the Warner move had nailed the coffin well and truly shut. The HD DVD Promotions group did cancel their big HD DVD party on the Sunday evening of the show and again this just played into the hands of the already story hungry press. But why were the AV press so feverish over the Warner announcement? To me looking as a neutral all it did was give the BD camp another ‘exclusive studio' to support them from May 2008.
Paramount and Universal were quick to cement their continued support for HD DVD within hours of the so called press exclusives, so from an unbiased view point working on the facts at hand it is safe to assume that we are carrying on, business as usual in this format war. And nothing that has come direct from the Toshiba and HD DVD Promotions Group in the weeks now following CES has stated otherwise. This however hasn't stopped the now frenzied speculation of the AV Press that it is only a matter of time until Blu-ray conquers all, indeed reading websites like ‘The Digital Bits' is almost like visiting the ‘official' Blu-ray press site. It's all getting a little silly and comments have come from some unusual quarters of the US press demanding that Toshiba drops HD DVD so we can all have just one format and open it up to the wider market. There are some that go even further and state HD DVD is now dead and that people should not buy the incredibly cheap and reliable players or the software from Paramount and Universal, rather they should buy those films on DVD instead. Really what kind of advice is that to come from the AV Press or the so called AV Press? Are the advertising budgets higher in the Blu camp?
This has to be the first time I have ever seen early adopters and the industry back the more expensive and unfinished format over the cheaper, technically finished rival. Indeed they argue that Blu-ray is the more technically advanced format, does anyone have any proof of that? It has superior storage in technical terms over HD DVD, but have we seen any example of that being used with Hollywood films and extras (apart from the cheating PIP streams?). Again I have no agenda here other than to ask some real questions of both camps.
It seems this format war is starting to get down to the dirty tactics stage and each side would appear to have their PR departments on over-time. It will inevitably come down to content at the end of the day and Warner's announcement puts the momentum firmly in the Blu-ray camp. But let's not forget that HD DVD has the tried and tested cheap hardware, software extras that work and internet access from the start, plus, two major studios still exclusively backing it. It looks like HD DVD is not going to just roll over and die as many in the industry (and their margins) would like it to do straight away. There maybe figures produced that show bigger margins of sale favouring Blu-ray, but at the same time HD DVD is still selling. And maybe the biggest problem for both and the industry in general is that they are not selling in big enough numbers to generate ‘Joe Public' interest.
To all those format fanboys on either side I just want to make one final observation. As a movie fan I want all my favourite movies on just one format and if things had panned out as they were supposed to do, we would have had that through the ‘official' DVD forum. The Manufacturers and studios developed their next generation HD disc format through that very channel, some demanding the special features and internet access for their family titles. Those same manufacturers and studios then for obvious financial reasons as discussed, went a different way as they saw bigger margins to be made. After all this is business we are talking about. So out of the window went the idea of just one format to be replaced by a challenger to the DVD Forums version that they all helped create. All this war has done is prove that this industry is just that, an industry to make money. They don't care that there are two formats, consumer confusion and you need both just to get your favourite films in high definition. They care only about their margins, they will back that format and on the current momentum it looks like they might just succeed in finally giving us one format, but not before there has been serious mudslinging and consumers and early adopters miss out financially. Just don't expect a Blu future to be budget players, bug free software or competitive once the other side fall away eventually.
And god help us real collectors once the region coding starts full time, you are technically still going to need two players (one region A and one region B). So with that knowledge, why are early adopters and consumers so desperate for one side or the other to win? The present has given us competition and cheap HD access, the BDA has had to get its finger out just to compete with the technical side of HD DVD. But in the end it is the film fan and AV Enthusiast that has had to suffer. We have had to buy two formats, spend money on software and at the same time finance this stupid war that will only line the pockets of these CE companies, those same companies that started this war in the first place. The early adopter has been used as a beta tester and will now have to buy yet another BD player for the profiles yet to come or have an HD DVD player which after 4 or 5 years will have no new software and go the way of the laserdisc player.
The only positive I can find in this whole format debacle is that the next format war will not be over optical media, but rather software players to handle downloadable content. It's still a good 10 years away but this is probably the last time we have such an obvious industry battle over profit margins on hardware. Indeed maybe the CE companies have just shown themselves that in the digital future without optical media and players there might be no real place for margins to exist in any software and network driven future. That my AV friends is another story for another day.
The views expressed in this editorial are those of the author and in no way represent the opinions of the AVForums in whole or in part.
<h3>With CES now well and truly over, Phil Hinton gives his opinions on where things now stand in the HD war. And clearly blames the industry as a whole for this mess!</h3>
Where do you start with an article on the current format war?
With so much press attention in the last few weeks maybe the subject has been done to death? However I feel that there are still too many unanswered questions and points of interest to let the current trend of negative press comment rule the column inches. You see I have always been format neutral when it comes to HD DVD and Blu-ray and even though I have been privy to information many enthusiasts would find captivating, I have never felt the need to discuss the subject in any real depth here. I have ignored the format discussion threads where the subject seems to go around in circles and have been content to report matters of fact within our podcasts and articles, rather than be a promotions arm of the war, unlike many a lazy reporter out there.
It is quite clear that there has to be a winner in this debacle and one side will have to hold up the white flag sooner or later. That also seems to be the overwhelming opinion of the general forum member who is still sitting on the fence. But what about those who have already taken the plunge and bought into one format or the other (or even both)? Does their opinion matter to anyone who has a responsibility for the current mess we find ourselves in? Or is it the very industry we love so much that was responsible for this format war?
When we talk about the consumer electronics world, we are inevitably talking about business and finance. It is true that the industry has seen hard times as the prices of electronic products are eroded and the margins get tighter. This is usually great news for the consumer and even though there are cries from the manufacturers, they also tend to survive as the years go by. With research and development they also invent the next big thing and that usually means a period of time where the margins are healthy before the volume and erosion kick in. There are many examples of this in action - look at flat panels in the LCD camp, the price of DVD players and software and the continual erosion of other CE products after their initial ‘honeymoon' period. So is it any surprise that one side of the HD disc battle offers up significant margins for the CE manufacturers with this new technology and format? This is one area that seems to be ignored when you do venture into format war discussion threads. Why is it that one sides hardware costs so much more than the other? Are there really such huge technological differences that warrant such a consumer price disparity? If that is the case, why is the more expensive format not complete in terms of special features and internet access when it comes to profiles? Is it maybe because the margin is better for the manufacturer and dealer?
Ok, so what I have said above may be construed by some as a conspiracy theory or a pro HD DVD angle of attack on the other format, but what I want to know is why the ‘facts' in the market place don't add up when you are a consumer or enthusiast. Indeed I have kept my mouth firmly shut in the past when it comes to ‘war' threads and I like to remain as independent as possible, but at the same time I get just as narked as the rest of you when it comes to things so obvious and ugly right in front of our noses. Can anyone give an authoritive answer as to why Blu-ray stand alone players are so much more expensive compared to HD DVD? Some will say that Toshiba are subsidising their players and I would tend to agree that seems likely, but even so that alone cannot be the reason a BD player can cost up to twice the price of a Toshiba HD-XE1's RRP! For the sake of this argument I acknowledge that the Playstation 3 is a BD player within a games console and it is now around the £300 mark, it offers the best possible route into the format for many and is upgradeable to an extent through firmware. But even so, why are the standalones still more expensive when compared to similar machines from the other side? At CES this year it was also very obvious that every major CE company (bar Toshiba for obvious reasons) has a BD player or two coming in the next few months, many with starting points of $500.
If you then take into account that many of these machines are still not profile 1.1 compliant and certainly not capable of BD live anytime soon, what is actually going on here? Top dollar, half finished format yet backed by every major CE manufacturer against a finished format profile in HD DVD and cheap, reliable standalone players, am I the only one who smells something off?
And then you have the studio debacle, with one side or the other claiming to have the superior releases. One of those very studios just happens to be owned by a CE company. Content is what will sell your format, but as with the case with DVD in the past, once the player prices hit rock bottom, it's the studios that make the margins not the CE companies. So if you are a manufacturer with some new product to sell playing optical media containing films, do you want the studio to get the entire margin once the competition and volume forces player prices as low as $20? Do you want a repeat of DVD? If I were a CEO my answer to that question would be an emphatic No!
And there is evidence that this is exactly what is happening with this format war. The DVD forum is responsible for the specifications for the HD DVD format (and its predecessor DVD). Every major CE manufacturer is a member of the DVD forum and many of them (as well as the studios) where responsible for suggesting and approving the technical specifications of the HD DVD format. One studio even went as far as demanding the PIP and internet features be added as mandatory. So why after all that trouble did almost every major CE company then jump aboard the Blu-ray format? This was a format designed originally for the Japanese market as a high definition recording format for HDTV in that country, that was then modified once Sony realised that PVR would be the dominant product for that market. It then had a researched and developed format that was no longer financially viable. So low and behold we then get the origins of the BDA (Blu-ray Disc Assosiation) with an aim to make sure the mistakes of DVD where not repeated by the CE companies when it came to high definition and their margins. Again it sounds like conspiracy theory but its all ‘fact' and well known within the industry. Let's not forget this is all about one thing, making money and keeping those margins healthy. Any business man will appreciate the finer details and so take the same route.
Indeed, I would go as far as saying the BDA and its members have the right idea when it comes to a business model for a sustainable profit margin and learning from their mistakes in the past. However, what I don't accept is the mess we currently now have to deal with. Let's start with the hardware issues.
Toshiba surprised everyone when they suddenly came to market early with HD DVD, it was such a surprise that the BDA were caught with their pants down. What also surprised everyone was that the specifications' were complete from day one and available on the software and hardware. It is now well known that the BDA had no answer and were at least still a year or more from market with a finished product and software. So BD was rushed to market and the first discs and player were woefully behind the Toshiba machine. Over the months this changed with content matching that of HD DVD and the machines improved through firmware upgrades. But even two years on we still do not have the finished specifications for Blu-ray and despite claims that it was never intended to have all the same profile, rather it's a value added extra you can take or leave, in truth BD is still not complete.
That's not to say that HD DVD is better than BD technically when it comes to movie playback, rather that HD DVD had the specifications nailed down before coming to market, BD has played catch up every since.
So I may be trampling over old ground, but this is important for my next point, the early adopter and consumer. Again let's stick to facts in this subject area and the following can be confirmed with our chat with the BDA in the CES podcast on this site. If you have a pre-profile 1.1 player that has no firmware upgrade and you want the PIP features as well as the promised profile 2.0 BD live add on, you will have to buy another player! That's right, you have to go and buy another blu-ray player to get the same features that are freely available on HD DVD. So not only did that first generation player cost the early adopter the best part of twice the price of HD DVD, they will now have to go and spend exactly the same again just to catch up with something a £120 HD DVD player can do already. Again this is obviously good for the margins.
This is where I get really annoyed with the whole format war topic and why I avoid the fanboy sites and threads about this subject. It amazes me that so called film fans take sides so aggressively with this discussion point that people who should know better are playing right into the hands of the marketers. And on top of this we now have journalists and website administrators telling us what we should buy and that HD DVD should just give up and go away as we only want one format – as long as it's Blu-ray it seems!
I agree that if there had been one format from the start – be it Blu-ray or HD DVD, we would have had an easier choice in what to buy and the software that would be available. It might by now have attracted an audience and customer base that included Joe public and his new HDTV. But on the other hand maybe we have been lucky that Toshiba came to market when they did and provided some competition to the BDA and its expensive format. If HD DVD hadn't arrived when it did, do you honestly believe standalone BD players would be as cheap as they are, or nearer the premium release prices of 2 years ago?
So this brings us back to which format should remain and who will hold up the white flag. Certainly the announcement by Warner that they were going BD exclusive from May 2008 had the entire CE industry and everyone at CES wondering if that was it for HD DVD. Indeed most of the journalists present and within ear shot were getting as excited as schoolboys and suddenly speculating that Paramount and Universal would be next, some even went to print with the rubbish they were speculating. I had to calm myself down at some points with the rabid exclamation from any journo you met that this years CES had finally won the war for Blu-ray. But to me it was another insight into just how ugly and frenzied the AV Industry can be when it smells blood and a tidy margin can be made.
The days that followed the Toshiba press conference at CES saw some stunning headlines from the likes of the broad sheet press, where their content was just plainly speculation and utter tripe. They proclaimed HD DVD was dead and that the Warner move had nailed the coffin well and truly shut. The HD DVD Promotions group did cancel their big HD DVD party on the Sunday evening of the show and again this just played into the hands of the already story hungry press. But why were the AV press so feverish over the Warner announcement? To me looking as a neutral all it did was give the BD camp another ‘exclusive studio' to support them from May 2008.
Paramount and Universal were quick to cement their continued support for HD DVD within hours of the so called press exclusives, so from an unbiased view point working on the facts at hand it is safe to assume that we are carrying on, business as usual in this format war. And nothing that has come direct from the Toshiba and HD DVD Promotions Group in the weeks now following CES has stated otherwise. This however hasn't stopped the now frenzied speculation of the AV Press that it is only a matter of time until Blu-ray conquers all, indeed reading websites like ‘The Digital Bits' is almost like visiting the ‘official' Blu-ray press site. It's all getting a little silly and comments have come from some unusual quarters of the US press demanding that Toshiba drops HD DVD so we can all have just one format and open it up to the wider market. There are some that go even further and state HD DVD is now dead and that people should not buy the incredibly cheap and reliable players or the software from Paramount and Universal, rather they should buy those films on DVD instead. Really what kind of advice is that to come from the AV Press or the so called AV Press? Are the advertising budgets higher in the Blu camp?
This has to be the first time I have ever seen early adopters and the industry back the more expensive and unfinished format over the cheaper, technically finished rival. Indeed they argue that Blu-ray is the more technically advanced format, does anyone have any proof of that? It has superior storage in technical terms over HD DVD, but have we seen any example of that being used with Hollywood films and extras (apart from the cheating PIP streams?). Again I have no agenda here other than to ask some real questions of both camps.
It seems this format war is starting to get down to the dirty tactics stage and each side would appear to have their PR departments on over-time. It will inevitably come down to content at the end of the day and Warner's announcement puts the momentum firmly in the Blu-ray camp. But let's not forget that HD DVD has the tried and tested cheap hardware, software extras that work and internet access from the start, plus, two major studios still exclusively backing it. It looks like HD DVD is not going to just roll over and die as many in the industry (and their margins) would like it to do straight away. There maybe figures produced that show bigger margins of sale favouring Blu-ray, but at the same time HD DVD is still selling. And maybe the biggest problem for both and the industry in general is that they are not selling in big enough numbers to generate ‘Joe Public' interest.
To all those format fanboys on either side I just want to make one final observation. As a movie fan I want all my favourite movies on just one format and if things had panned out as they were supposed to do, we would have had that through the ‘official' DVD forum. The Manufacturers and studios developed their next generation HD disc format through that very channel, some demanding the special features and internet access for their family titles. Those same manufacturers and studios then for obvious financial reasons as discussed, went a different way as they saw bigger margins to be made. After all this is business we are talking about. So out of the window went the idea of just one format to be replaced by a challenger to the DVD Forums version that they all helped create. All this war has done is prove that this industry is just that, an industry to make money. They don't care that there are two formats, consumer confusion and you need both just to get your favourite films in high definition. They care only about their margins, they will back that format and on the current momentum it looks like they might just succeed in finally giving us one format, but not before there has been serious mudslinging and consumers and early adopters miss out financially. Just don't expect a Blu future to be budget players, bug free software or competitive once the other side fall away eventually.
And god help us real collectors once the region coding starts full time, you are technically still going to need two players (one region A and one region B). So with that knowledge, why are early adopters and consumers so desperate for one side or the other to win? The present has given us competition and cheap HD access, the BDA has had to get its finger out just to compete with the technical side of HD DVD. But in the end it is the film fan and AV Enthusiast that has had to suffer. We have had to buy two formats, spend money on software and at the same time finance this stupid war that will only line the pockets of these CE companies, those same companies that started this war in the first place. The early adopter has been used as a beta tester and will now have to buy yet another BD player for the profiles yet to come or have an HD DVD player which after 4 or 5 years will have no new software and go the way of the laserdisc player.
The only positive I can find in this whole format debacle is that the next format war will not be over optical media, but rather software players to handle downloadable content. It's still a good 10 years away but this is probably the last time we have such an obvious industry battle over profit margins on hardware. Indeed maybe the CE companies have just shown themselves that in the digital future without optical media and players there might be no real place for margins to exist in any software and network driven future. That my AV friends is another story for another day.
The views expressed in this editorial are those of the author and in no way represent the opinions of the AVForums in whole or in part.